Are the poor so present-biased?

Rachel Cassidy

No 2018-19, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: Estimates of “present-bias” among the poor may be exaggerated if poor individuals are credit-constrained and expect to have greater liquidity in the future. I conduct an experiment in rural Pakistan which provides causal evidence of this effect. I use windfalls to generate fully exogenous variation in subjects’ liquidity constraints. I show that fluctuating liquidity has a significant and sizeable effect on measures of time-inconsistency, which does not operate via cognitive functioning. Importantly, I establish that the causation runs from tighter liquidity constraints to appearing “present-biased” — rather than truly present-biased individuals making choices which lead to tighter liquidity constraints.

Date: 2018
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://ora.ox.ac.uk/objects/uuid:4bbd6eca-cdcf-4242-92cd-165f9773bb1a (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:csa:wpaper:2018-19

Access Statistics for this paper

More papers in CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford Contact information at EDIRC.
Bibliographic data for series maintained by Julia Coffey ().